1887, after very deliberate action, by the Congress of the United States, its passage being brought about by the then chaotic conditions of transportation rates existing during the years from 1880 to 1887. It then became evident that it was necessary to pass an act regulating interstate commerce and regulating the carrying corporations of the country. The discriminations then existing were ruinous to almost all lines of industry.

This act was not the resutt of a hasty conclusion, but Congress, through committees, informed itself of the necessity of such legislation. Hearings were had throughout the country and information gathered, and the outcome of all that information was the interstatecommerce act passed in 1887. It was the judgment of the gentlemen who passed that act that it covered the ground fairly and squarely, without injury to the railroads or to the carrying corporations of the country, and without injury to any of the shippers of the different localities interested.

The underlying principle of the act was, as I understand it, equality in the use of the transportation facilities of the country; no discrimination as against persons or places in any of the commercial commodities.

The act, as I understand it, has been fairly administered; the Commissioners who were appointed under its provisions were men of eminently fair disposition and fair reputation. There is not a single exception to be made, as far as I am informed on the subject. They were all able, capable men, selected irrespective of political affiliation. The railways, or the carrying corporations of the country, submitted with grace to all the decisions made by that Commission for quite a period of years. While there were violations and discriminations going on, possibly, they were of an inconsequential nature, and were promptly adjusted upon complaint and the ruling of the Commission thereon, so that the act was fairly operative until 1897, when a decision of the Supreme Court of the United States put an end to the authority of the Commission's rulings and the placing of those rulings in force.

The proposition is a plain one, that if the Commission has not the power to enforce its rulings, it has practically no value.

No shipper, no receiver, no man in trade, and none with whom I am connected, seeks an unduly low rate. All we desire is an equitably adjusted rate for all concerned, and that rate to be paid without discrimation by all who ship the same commodity. No discrimination to be practiced as against localities. We have on several occasions come in vain to Congress for relief. Last year we commended to your consideration the Cullom bill, which, though it was reported, was never acted upon.

We now come to you again with this bill seeking relief, asking you to make the interstate-commerce act as operative as it was supposed to have been at its creation, and to endow the Commission with that power which the Supreme Court holds it does not possess under the present act. We think the enforcement of a ruling of the Commission after a hearing, its immediate enforcement until revoked by a court, will give us the relief sought for. The other matter, relating to the manner of how this is all to be done, is a question for lawyers, which I will not touch upon. But I find that the milling industry of this country has been seriously injured by the discriminations which have been

practiced between the raw material—wheat—and flour, the product of that material.

The result is self-evident, because the discriminative rates have built up the milling industry of Europe at the expense of the milling industry of this country.

An extract from a paper, which I have here, published in Dubuque, Iowa, refers to the matter briefly, and I will, with the permission of the chairman, file this with the committee as a part of my remarks. The article referred to is as follows:

A MENACE TO THE MILLING INDUSTRY.

A writer in a recent issue of the Saturday Evening Post calls attention to the potent influence which the railroads of this country exercise over its industries. According to the Government reports, the exports of wheat in June of this year were in round numbers 13,000,000 bushels, which was 50 per cent more than for the same month last year. In July there were 18,000,000 bushels exported, nearly three times as much as in July, 1900. For the seven months ending with July the amount of wheat exported was over 95,000,000 bushels, or 45,000,000 bushels greater than in the first seven months of 1900. The first thought is likely to be that this is an excellent showing for this country, yet the contrary is the case. In fact, it is the poorest showing the country has ever made in the way of exports, for these enormous foreign shipments point to a commercial calamity which is sure to overtake a great industry-that of flour milling-unless it is averted by prompt action on the part of those who have it in their power.

The situation is so simple that anyone may see it. The milling capacity of this country has increased so rapidly in the last ten years that a foreign outlet for a part of the flour is an absolute necessity to keep the mills running. In fact the capacity of many of the mills has been increased by reason of the export business they have built up.

The Minneapolis mills exported for the crop years ending with August, 1899 and 1900, nearly one-third of their output, or about 5,000,000 barrels each year. However, for two years the export trade has steadily fallen away; first in loss of profit, though the volume of shipments was maintained. The mills kept their brands in the foreign market, although it was impossible to sell at a profit owing to the low prices made by the European millers. This year American millers have been unable to sell their four in Europe except at a loss most of the time, and as a result the voulme of flour exports has fallen off heavily.

The cause of this falling off of the flour export business is discrimination in freight rates whereby wheat, the raw material, may be shipped from the West to Europe at a lower rate of freight than flour, the manufactured product. The millers of Great Britain and of the Continent are thereby enabled to secure American wheat and to make flour which can be sold cheaper in London, say, than American-made flour can be sold. This discrimination in freight favoring wheat as against flour means, unless relief be given to the miller, practically the ruin of the great industry, and a returna retrograde step-of this country from being a shipper of a manufactured article to becoming an exporter of raw material.

In August the published tariff on wheat and flour, all rail from Minneapolis to New York, was 22 cents per hundredweight, but the actual rate obtainable on wheat was 16 cents. No reduction in rates was obtainable on flour. Adding to this heavy discrimination against flour the fact that the steamship companies made a rate of 1 cent a bushel on wheat from Boston and Philadelphia to London and Liverpool, but that flour paid from three to five times that rate, under the circumstances it is not surprising that the export flour trade has been paralyzed.

That the reader may fully comprehend the magnitude of the industrial tragedy that is in sight, the importance of the flour-milling industry must be understood. In round numbers the capital invested in milling plants is $250,000,000, which is only exceeded by iron, steel, and foundry works, and cotton-goods factories.

Take away from these mills their export trade, and they must find an additional domestic market for their surplus or close down. The Minneapolis milling companies would be forced to sell 5,000,000 barrels of flour in American markets more than they have been doing or close their mills one-third of the time. The latter is impossible. Owing to their wealth and strength, they might be able to sell their entire output in the domestic market, but this means that much less flour sold by other mills. At the same time, there would also be other exporting mills endeavoring to

dispose of their surplus output in an already overstocked market. The final result would be the wiping out of all but a few small mills with a local trade, and a giant corporation or two that would control the trade of the cities.

The trouble may be traced to the big elevator companies of the West and Northwest. To illustrate-and this can not be successfully denied-an elevator manager at Kansas City, Omaha, Minneapolis, or Chicago has an accumulation of wheat which he wishes to get out of the country. He goes to the several traffic managers, saying, "I have a million bushels of wheat to move, and the road making the best rate gets the business." The traffic managers want the business, and one of them gets it.

Here is where this policy is shortsighted. A road may several times a year get a few million bushels of wheat to haul, and it can run solid trains to move it. Then the movement stops for a time and part of the road's equipment is idle, whereas it has been crowded and other traffic has been inconvenienced for a time. The elevator man has little further use for the road until he can get another cut rate. With the miller it is different. Every town of any size has a mill, in which a number of men are employed. Shipments of flour continue evenly and uninterruptedly throughout the year. Coal, cooperage stock, bags, and machinery are shipped in, and, in the aggregate, form an immense amount of business.

As wheat exporting countries Russia and Argentina are almost as important as the United States. As milling and manufacturing nations they are insignificant. Their grain goes from the producer to the exporter at a fraction of its worth, and the peasantry of those countries are as far below the American farmer as the handmills of our ancestors were below the roller mills of to-day. Yet let the manufacturer and all that comes with him step in between the peasants of those countries and the grain exporters, and the importance of those nations will steadily increase. Remove the manufacturer of flour in this country, and the other industries that go with him, from the place he occupies between the farmer and the exporter of wheat, giving the farmer over into the hands of the few large elevator companies and a milling corporation or two, and the great agricultural manufacturing States will crumble back to pastoral primitiveness, and the great flour milling industry and the hum of wheels in thousands of villages and towns will be a thing of the past.

The mills of this country, as must be known by you, have largely been engaged for some years in export trade, and all of them have increased their milling capacity as their export trade increased. Since the discrimination practiced between wheat and flour it has become apparent that the milling capacity is beyond our domestic wants, and the result of crowding all the capacity of our mills for the production of flour for consumption in this country alone has been ruinous to the trade. About four weeks ago an arrangement was arrived at with the railroads by which they gave us what they called an export rate on flour, which was based upon the export rate in force upon wheat.

We all felt that there was now a chance to do something, but that rate was hardly in existence before it was recalled and the old conditions that existed prior to the 17th of March again prevailed, wheat being exported at a lower tariff rate than flour.

Mr. FLETCHER. Will you please tell us about what is the relative difference between wheat and flour in the export rate?

Mr. MAGDEBURG. The rate which they made us was 2 cents per 100 pounds lower than the domestic rate, which was supposed to fairly equalize matters and to give us a chance to do some export business. Mr. FLETCHER. Two and one-half cents a hundred pounds? Mr. MAGDEBURG. Yes, sir; 24 cents a hundred on flour.

Mr. WANGER. What was the rate on wheat?

Mr. MAGDEBURG. The rate on wheat has been varying all the way from 2 cents to 6 cents per hundred. It has been at times absolutely suicidal to grind for the export market.

Mr. BACON. Two and one-half to 6 cents a hundred less than flour? Mr. MAGDEBURG. Yes, sir; 2 cents to 6 cents a hundred pounds less than flour.

Now, gentlemen, it has been shown by Government statistics that

in 1900 the aggregate of flour exported was 96 per cent of the entire export of wheat and flour reduced to wheat, while in 1901 it had dropped from 96 per cent to 55 per cent, owing to the discrimination practiced. For 1899 the percentage was 86 per cent, so that in 1901 it was really 10 per cent more than the previous year, while the subsequent year it was 41 per cent less. As to why this is done I think the Industrial Commission, which has been appointed by Congress, has not been able to elicit from the railway interests any answer. It is inexplicable to me, and to many of the men in the trade, because the products of the farm will certainly go forward some time, and there is no reason why after it has reached somebody's elevator that particular grain that is in that elevator, even if it is a very large amount, should be rushed to market at a discriminative rate against flour.

It would go forward as wheat in its due course or it would be ground by the mills and would then go forward as flour in due course of time. As Mr. Jones stated, the by-products would remain here; they would be fed to the stock on the farm, the sheep or hogs and the cattle, and in this way would help to keep up the condition of the farm to a higher standard. We seek no relief from you at the expense of the carrying interests of the country. All we ask is that we be treated on a parity with everybody else. It seems to me self-evident that if I am milling in Milwaukee and am shipping my flour to the East or to Europe for sale-even if I am at a disadvantage of but 2 cents per 100 pounds against my neighbor, who is perhaps better acquainted with the railroad man than I am-it is impossible for me to do business, because 5 cents on a barrel of flour is considered a good milling profit nowadays, and it would be useless for me to attempt to do business on such an inequality.

Therefore, in fairness and on correct business principles, it is necessary that all shippers stand alike with the railroads, and that no rebates or discriminations be made as against shippers or as against localities. This is all that we ask, and we do not think that asking this imposes any hardship to the railroads; none whatever. We are not asking for a particular tariff, we are not asking for a particular rate upon our flour; we are simply asking that the discriminations which have been practiced as against individual commodities and locations shall be discontinued by this bill being passed, giving the Commission more power, or giving it the power which it was supposed to have when the Commission was created. It seems to me, a layman, that the railroads should join hands with us, and insist that all should be treated alike.

I can see no reason why a railroad or a carrying corporation should favor A as against B, so long as A ships the same product and in the same quantity. There is no reason why a railway or a carrying corporation should favor one locality at the expense of and to the detriment of another. They should not. They are public highways and those public highways should be for the use and at the disposal upon equal terms of all who wish to use them, and we come to you for that relief which we think we are entitled to.

Mr. FLETCHER. Will you please tell us where these discriminations against localities come in; what are the localities which are discriminated against?

Mr. MAGDEBURG. I can not now name any particular locality, but at times wheat from beyond the Missouri River and Northwestern

points is carried through Chicago at a very much less percentage of rate than it is from Chicago or Milwaukee or Minneapolis. There are times when these discriminations take place. They are not always in vogue, but they are spasmodic, so to speak. When somebody has got a big lot to move, they want to move it, and they go to the freight agent and they say, "I have a lot of wheat to move," and they get a special rate. That does not benefit anybody only that particular individual, but it is hard on others who are not getting the same rate.

Mr. COOMBS. Let me ask you, Supposing you ship your flour to Europe, do you get any rebate because of the export shipments; is there any such thing as that coming to you as there is coming to the wheatman?

Mr. MAGDEBURG. I stated here a while ago that the railroads made an open rate which was 2 cents a hundred less on flour which was exported as against flour for domestic use.

Mr. COOMBS. I did not understand that.

Mr. MAGDEBURG. That rate went into effect on the 17th of March, but it had hardly gone into effect when it was rescinded. There was one condition attached to that, and that condition was that the minimum shipment should be 35,000 pounds, and that should be the minimum carload or the minimum contract made, while there was another stipulation which compelled the shipper to load the cars to their full capacity. That was an arrangement arrived at between the milling interests and the carriers of the country to go into effect on the 17th of March.

We all, as I stated, went to work and changed our codes. We notified our correspondents that after this no proposition would be entertained for any shipment under 35,000 pounds. We changed the codes and the quantities in the codes, and got them out all ready to go into operation. But hardly had this been done when this very arrangement which had been entered into by the milling industry of the country and the shippers was recalled, and the rate which will go into effect on Monday, the 14th of April, will be precisely the same rate on flour for export as for domestic purposes. The rate will be precisely the same, while between the 17th of March and the 14th of April the rate was 2 cents differential. It was not in the nature of a rebate or a remission or in the manner of an allowance in favor of one shipper against another, but it was an open, published rate.

Mr. FLETCHER. Have they changed the rate on export wheat to correspond with that change?

Mr. MAGDEBURG. No, sir; they have not.

Mr. FLETCHER. They simply went back to the old rate.

Mr. MAGDEBURG. Simply went back to the old rate. And this has disconcerted all of us and put us in a very awkward position. Now, we, as shippers, as I said before, can not see why it is going to be an injury to the railway interests of the country to insist that they shall treat all alike. We can not see why A should have a better rate than B, or why at times a locality should have an advantage over another locality. All we ask is fair treatment, and then if competition wipes out a mill or another industry here and there that must be ascribed to other causes than the question of transportation.

We are willing as a people and as producers to take our chances; but none of us are able to cope with one who is favored in the matter of freight rates, and I fully coincide with Mr. Jones, who preceded